Based on the amended Rulebook on the Tariff System in Public Passenger Transport within the Territory of the City of Belgrade, starting from January 1, 2025, public transport in the integrated tariff system within the territory of Belgrade is free of charge for all users.
This has led to dilemmas and raised several questions for employers operating in Belgrade regarding the obligation to reimburse employees for commuting expenses, particularly:
- Are employers still obligated to reimburse employees who live in Belgrade and use public transportation (which is now free of charge) for their commuting costs?
- In these circumstances, is there an obligation for employers to reimburse transportation costs to employees who commute by other means (taxi, personal vehicle, etc.), given that everyone now has access to free public transport?
Here are the key points to consider:
- The obligation to reimburse transportation costs has not been abolished, as the relevant provision of the Labor Law has not been amended or repealed.
- The right to reimbursement for transportation costs has never implied that employees are required to use public transportation. The reference to the price of a public transportation ticket in the Labor Law provision that governs this right has always simply set the minimum employer obligation in terms of reimbursement.
- Employees who used alternative means of commuting (own car, taxi, etc.) undoubtedly still have commuting costs for which the Labor Law recognizes the right to reimbursement. What has changed is that the scope of this right can no longer be determined in the manner prescribed by the Labor Law.
- Employees who used public transportation to commute will no longer have commuting costs, but judicial practice has previously recognized the right to reimbursement for such costs even if no actual expenses are incurred.
Legal Provisions
According to Article 118, Paragraph 1, Item 1 of the Labor Law, employees are entitled to reimbursement for commuting costs in accordance with the general act and employment agreement, specifically for travel to and from work, in the amount of the public transportation ticket price if the employer has not provided transportation.
As mentioned earlier, this provision remains in effect unchanged.
Accordingly, the employer is still obliged to reimburse commuting costs, which they can only be exempt from if they have provided employees with their own transportation. Own transportation refers to using personal vehicles, engaging another person for transportation (such as a carrier), and similar arrangements.
This means that if the employer has not provided their own transportation for employees to commute to and from work, all employees have the right to reimbursement for commuting costs.
In terms of the amount of transportation costs, the Labor Law sets a minimum, defined by the price of a public transportation ticket.
Based on Article 8, Paragraph 2 of the Labor Law, which allows for higher rights and better working conditions to be established through a general act or employment agreement, the employer may reimburse employees for commuting costs in an amount higher than the legally guaranteed amount.
If the employer intends to reimburse employees for the actual transportation costs (e.g., fuel costs if using their own car or the cost of a taxi service), it is necessary for this issue to be regulated through a general act or employment agreement.
Judicial Practice and Ministry Practice
Judicial practice in previous years has been fairly inconsistent regarding the right to reimbursement for commuting costs.
There are rulings that employees are entitled to reimbursement for these costs, regardless of whether the costs have actually been incurred:
- General acts issued by the employer that regulate reimbursement conditions have been found to be inconsistent with the law when linking the right to reimbursement to the distance from the employee's residence to the workplace (Constitutional Court Decision No. 154/2011 of July 3, 2014);
- This is a right established by law, which means that, according to Article 8, Paragraph 1 of the Labor Law, this right cannot be taken away or reduced through a general act or employment agreement. Moreover, the law has already provided the conditions and criteria for this right, and even if the employer has not further defined it, the law can be applied directly (Legal Opinion of the Civil Department of the Supreme Court of Cassation, Case No. Spp 21/2015 from April 5, 2016);
- Since the purpose of commuting cost reimbursement is to ensure the employee's presence at work, the right to reimbursement for commuting to and from work is not conditioned on proving that these costs have been incurred (Appeal Court Decision in Novi Sad, Case No. Gž1 100/2016 from April 20, 2016);
- The right to reimbursement for commuting to and from work, according to the cited provisions, is not conditioned on the existence of organized public transport or the distance from the place of work, but only on the actual costs incurred for commuting. These costs are determined based on the number of actual working days and the price of a single public transportation ticket. The fact that an employee lives 500 meters from their workplace does not mean they are obligated to walk. This distance should not necessarily be considered small, as proximity or distance is relative depending on the individual’s psycho-physical abilities, and the cited relevant regulations do not require that these abilities be taken into account when calculating commuting costs (Supreme Court of Cassation Decision, Case No. Rev2 86/2021 from June 30, 2021);
- Employees are entitled to reimbursement for commuting, regardless of whether they use public or private transportation or walk to work. The reimbursement is not conditioned by the distance from the employee’s home to the workplace. The costs are determined based on the number of actual working days and the price of a single public transportation ticket. The law does not require that the use of public transportation be a condition for the right to reimbursement (Supreme Court of Cassation Decision, Case No. Rev2 784/2021 from April 12, 2023).
However, there are also rulings stating that reimbursement does not apply if no costs have actually been incurred:
- Even if the employer has regulated the employee’s right to commuting cost reimbursement in their general act, the employee is entitled to it. Of course, abuse of this right must be prevented, such as when an employee claims reimbursement despite not having incurred any costs (living close to work, walking to work, using a company car, etc.). If the employer has not defined criteria for reimbursing employees’ transportation from their home to work, all employees are entitled to reimbursement, unless, in reasonable judgment, such a request is obviously unjustified (Legal Opinion of the Civil Department of the Supreme Court of Cassation, Case No. Spp 21/2015 from April 5, 2016);
- Employees who are absent from work during their annual leave, paid or unpaid leave, or are temporarily inability for work, are not entitled to reimbursement for commuting, as no such costs have been incurred for them during these periods (Ministry of Labor, Employment, Veterans, and Social Affairs Opinion, No. 011-00-00284/2017-02 from May 11, 2017);
- The decision on the validity of the claim depends on the specific facts of the case and must prevent the abuse of this right. For example, if an employee needs more time to walk to a bus stop than to walk to work, the reasonable conclusion is that the distance from the employee’s home to the workplace does not justify reimbursement for these costs (Supreme Court of Cassation Decision, Case No. Rev2 3069/2020 from February 10, 2021).
Tax Aspect
According to Article 18 of the Personal Income Tax Law, no salary tax is payable on employee reimbursements for documented commuting costs to and from work, up to the price of a monthly public transportation ticket, or the actual transportation costs, but no more than 5,398 RSD per month (the non-taxable amount valid at the time of writing the article).
This means that undocumented transportation costs (even if they do not exceed the taxable amount), as well as those that are documented but exceed the non-taxable amount, are considered salary and subject to salary tax.
Therefore, employees are not guaranteed the right to reimbursement for commuting costs up to the non-taxable amount, but rather this is the amount on which no salary tax is charged under the Personal Income Tax Law.
Under the provisions of the Labor Law, general acts, and employment agreement, employees are entitled to reimbursement for commuting costs, which may be lower or higher than the non-taxable amount.
Conclusion
The reimbursement of commuting costs is legally considered as compensation for actual damages, which under the Law on Obligations can be understood as a reduction in one’s assets due to the payment of certain expenses.
In this context, the very right to reimbursement can be questioned when no actual damage or expense has occurred. It is debatable whether such a payment should even be considered a reimbursement, as it essentially is not, which further opens the issue of its tax treatment.
However, as noted in the judicial practice section, this issue is not new but has been brought to the forefront due to the abolition of the obligation to pay for public transport.
Therefore, considering judicial practice and provisions of the Labor Law, the obligation to reimburse commuting costs still exists.
If the employer has not provided their own transportation, employees are entitled to reimbursement for commuting costs, which should be further elaborated in the general act or employment agreement.
The minimum amount of reimbursement prescribed by the law is no longer applicable, and this is the only certain change resulting from the removal of the public transportation fee.
In the absence of an applicable legal minimum, as well as official opinions from the relevant ministry, employers should regulate the scope of this right and the amount of reimbursement through their general acts (if they have not done so already). One possible solution is to maintain the previous level of reimbursement.
Employers may not diminish employee rights guaranteed by the Labor Law – the Law guarantees all employees the right to reimbursement for commuting costs, and the employer cannot legally limit or cancel this right for employees using public transport. Additionally, employers are not authorized to dictate which transportation employees use (surveying employees about this issue would also raise questions about the lawful processing of personal data), especially given the possibility that employees may use or combine different transportation means at different times.
It is expected that the relevant ministry will soon issue an official opinion on the application of Article 118, Paragraph 1, Item 1 of the Labor Law in the new context of free public transportation in Belgrade, which may differ from the opinion presented here.
What remains to be seen is whether the obligation to document commuting costs will remain in the tax regulations if the right to reimbursement is recognized even in the absence of actual expenses (if employees truly use public transportation). In other words, whether an employee’s declaration of using public transportation will satisfy the legal requirement for the reimbursement to be documented, thus allowing the employer to benefit from the non-taxable amount.
This article is for informational purposes only and does not constitute legal advice. If you need additional information, feel free to contact us.